First Investment Property, What The Hell Am I Doing?

8 Replies

Hey everyone,

So I just signed up for bigger pockets and am brand new to real estate investing. I currently do rental arbitrage, meaning that I lease from landlords to then rent out the properties on sites like airbnb, etc. 

But I just got offered the opportunity to invest into my first ever property that a friend of mine is looking to sell. 

It's in Bradley, IL... About 1 hour from Chicago and around 50K for 2bds and 1 bath. 

I knew I'd be purchasing properties sooner or later but now that it may be happening I'm not exactly sure how to go about the whole thing. 

I know I'll be doing some renovation work to make it more appealing since I want to turn it into a short term rental that I'll actually own. 

Any advice? And anyone in the surrounding Chicago area that's an agent, contractor or property manager?

Thanks in advance!

Hi Rachel, 

Welcome to the wonderful world of BP! 

I don’t hear too much of others renting and then airbnbing properties in Chicago. Very smart. 

As for your potential property, you may want to consider obtaining a 203k loan where the bank gives you money to rehab the property. Or if only minor work is needed, use your credit card to purchase materials and pay labor in cash. 

Thank you for your insight! I was reading about 203k loans and thought that I might have to actually live in the property? I'm going to guess with your reply that's not the case. Why would you suggest using cash to pay for labor? Thanks again for your feedback! I'd love to talk more. 

@Rachel Wagner since your new at it, definitely get it professionally inspected to make sure nothing major is wrong with it.

I’m sure it’s very nerve wracking, but whether it’s this property or another, you will thank yourself in time that you did it.

Consider a 15 year loan, would likely still cash flow with the Air BnB method.

If you haven’t already, get your financing in order, if seller does not have a loan on subject property, perhaps they’ll carry a contract for you.

@Rachel Wagner just because a deal comes across in a way that is creative or give you an inside deal, does not make it a good deal. Make sure you know the value of the deal as an investment.

As far as financing Hard money may be an option. 

@Rachel Wagner Welcome to BP. 

Not to worry, most of us didn't know WTH we were doing when we started! So, you are in good company

Though I know nothing about your submarket, I can tell you that Airbnb can work if you understand the market dynamics very well because some cities may not do so well with vacation rentals due to a variety of reasons and other cities thrive. 

However, you might be able to make other strategies such as corporate rentals or other strategies to work (you will, of course, have to do some research and get creative). 

Now, for this $50k deal, I think you should connect with local professionals to help with ensuring that the property is structurally sound at the end of the day. 

Good luck on your strategy and make sure to get a lot of training and mentoring.